Employer Retirement Plan Mandate – New York State
If your New York based company is not currently offering a retirement plan for your employees, you may be required to offer one immediately.
On October 21, 2021, New York State Governor Kathy Hochul signed legislation that requires many private sector employers to enroll their employees in a state-run retirement savings program. The NYS legislature approved this program to help many New Yorkers have an easier way to save for retirement. Their surveys determined that employees are 15 times more likely to save if they can do so through their workplace and 20 times more likely to save if they are automatically enrolled in a program. California, Oregon and Illinois already have established these state run programs.
If employers meet the requirements described below, participation in the New York State Secure Choice Savings Plan (Secure Choice) will be mandatory.
The newly signed law applies to all New York State employers (both for profit and not for profit) that:
a) employed at least 10 employees in the state at all times during the previous calendar year,
b) have been in business at least two years,
c) have not offered a qualified retirement plan (such as a 401(k) or Profit Sharing Plan) in the preceding two years.
The new law takes effect immediately, but grants employers additional time to implement. Participating employers will need to set up payroll deposit IRA’s for their employees within nine months from the date the Secure Choice board opens enrollment. Once enrolled, employers will be required to withhold 3% of a person’s pay via payroll deductions from all employees, unless the employee affirmatively opts out of the program, or opts to have a greater or lesser amount than 3% withheld.
If this new law applies to you as a business owner, now is the time to review your business and retirement savings objectives. Is this state mandated Secure Choice program the right fit for your company? Should you consider the additional benefits and savings opportunities that a 401(k), SIMPLE IRA or 403(b) plan could provide? If you would like to discuss your options in further detail, please contact Tina D’Agata in our Retirement Plan Administration Niche at 315-234-8174 or email@example.com.
The information reflected in this article was current at the time of publication. This information will not be modified or updated for any subsequent tax law changes, if any.